Philadelphia universities should withhold Wage Tax on 50% of the stipend amount it pays any graduate student who renders services to the university.
Employers based in Philadelphia –businesses, non-profits and academic institutions alike– are required to withhold the Wage Tax from all workers’ paychecks. Employers remit the tax to the City on behalf of workers.
To help graduate students who receive stipends as part of their academic training, the City allows universities to withhold Wage Tax on half, instead of the full, stipend amount.
For example, if a graduate student receives an annual stipend of $30,000, the university should withhold and remit Wage Tax on $15,000.
Wage Tax rates can change from one year to the next, and are different for residents and non-residents of Philadelphia. Employers can check the Department of Revenue’s website for current Wage Tax rates.
This Wage Tax reduction applies to all graduate student stipends, regardless of
- The kind of service the graduate student performs; or
- The number of hours the graduate student works.
This Wage Tax reduction is only for stipends graduate students receive from their own universities. The reduction does not apply to funding they receive from international, federal, state, or local institutions or grants.
The reduction is effective January 1, 2019. Graduate students whose universities withheld Wage Tax on 100% of their stipend in 2019, or after, can request a refund from the Philadelphia Department of Revenue. To receive a refund, graduate students must submit the salaried employees refund petition.
University payroll and accounting departments can email revenuetaxadvisors@phila.gov with any questions about this Wage Tax stipend reduction.
Photo credit: J. Fusco / Visit Philadelphia
